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Issues Involved:
1. Deduction of wealth-tax liabilities. 2. Acceptance of partial partition of the HUF. 3. Allowance of outstanding liability payable to M/s. J.K. Hosiery Factory. Detailed Analysis: 1. Deduction of Wealth-Tax Liabilities The primary issue was whether the wealth-tax liabilities of Rs. 4,54,907 (Individual) and Rs. 21,91,585 (HUF) should be deducted while computing the value of the estates left by the deceased. The Assistant Controller of Estate Duty (ACED) had disallowed these deductions, arguing that the assets related to these liabilities should not suffer the burden of estate duty. The Controller of Estate Duty (Appeals) allowed these deductions, leading to the Revenue's appeal. The Tribunal noted that the deceased was assessed for wealth-tax in the status of HUF up to the assessment year 1972-73 and in the status of individual from 1975-76 to 1977-78. Section 44 of the Estate Duty Act, 1953 provides for deductions of debts and encumbrances while determining the value of the estate. The Tribunal referred to the commentary in "Estate Duty Law" by Chaturvedi and Pithisaria, which supports the deduction of income-tax and wealth-tax liabilities as debts. Consequently, the Tribunal upheld the decision of the Controller of Estate Duty (Appeals), allowing the deductions after proper verification. 2. Acceptance of Partial Partition of the HUF The second issue was whether the partial partition of the HUF effected on 2-7-1979 should be recognized for estate duty purposes. The ACED had not accepted this partition, citing Section 171(9) of the Income-tax Act, 1961, which does not recognize partial partitions made after 31-12-1978. The Controller of Estate Duty (Appeals) had accepted the partial partition, leading to the Revenue's appeal. The Tribunal observed that Section 171(9) is a deeming provision applicable only to income-tax cases and not to the Estate Duty Act. Under Hindu Law, there is no prohibition against partial partitions, and the deceased was competent to effect such a partition. The Tribunal also noted that Section 171(9) was introduced with retrospective effect, and the deceased could not have anticipated this provision at the time of the partition. Therefore, the Tribunal upheld the decision of the Controller of Estate Duty (Appeals), recognizing the partial partition for estate duty purposes. 3. Allowance of Outstanding Liability Payable to M/s. J.K. Hosiery Factory The final issue was whether the outstanding liability of Rs. 4,57,448 payable to M/s. J.K. Hosiery Factory should be allowed as a deduction. The Tribunal noted that this issue was covered by its previous decisions, where similar liabilities were allowed as deductions in income-tax assessments. Consequently, the Tribunal upheld the decision of the Controller of Estate Duty (Appeals) to allow this liability while computing the net estate of the deceased. Conclusion The Tribunal upheld the decisions of the Controller of Estate Duty (Appeals) on all three issues, allowing the deductions of wealth-tax liabilities, recognizing the partial partition of the HUF, and allowing the outstanding liability payable to M/s. J.K. Hosiery Factory.
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